The Movie Industry
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1995 1996 1997 1998 1999 2000
box office gross sales (M) average attendance (M)
$4.35/ticket
$5.39/ticket
12
Multiplexes and Megaplexes
average screens/theater
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000
13
Country Cinema and City Screens
•Each has approximately 2800 screens
Country Cinema versus City Screens?
FISCAL YEAR ENDING 12/31/1998 12/31/1997 4/1/1999 4/2/1998
Net Income/Assets –0.044 0.033 –0.016 –0.031
change in Net Income/Assets –0.076 0.049 0.014 –0.057
Liabilities/Assets 0.676 0.673 0.882 0.825
EBIT/Interest –0.793 2.407 0.314 –0.152
Assets/CPI (millions) 428 386 599 496
Quick Ratio 0.295 0.443 0.543 0.616
Cash/Assets 0.025 0.027 0.014 0.012
Inventory/COGS 0.019 0.016 0.000 0.000
Sales Growth 0.050 0.075 0.204 0.133
Implied Default Probability 12/31/1998 12/31/1997 4/1/1999 4/2/1998
Net Income/Assets 0.055 0.030 0.055 0.055
change in Net Income/Assets 0.055 0.035 0.030 0.050
Liabilities/Assets 0.055 0.055 0.090 0.090
EBIT/Interest 0.085 0.030 0.070 0.070
Assets/CPI (millions) 0.035 0.045 0.035 0.035
Quick Ratio 0.090 0.065 0.050 0.050
Cash/Assets 0.059 0.059 0.059 0.055
Inventory/COGS 0.045 0.045 0.030 0.030
Sales Growth 0.030 0.030 0.032 0.030
RiskCalc default probability 0.048 0.039 0.053 0.054
Other Ratios 12/31/1998 12/31/1997 4/1/1999 4/2/1998
rent expense (from footnotes) 66,800 57,600 165,370 106,383
Fixed Charge Coverage 1.66 1.82 1.33 1.40
recurring charges)
3.96 4.05 5.95 3.78
Country Cinema City Screens
ratios in debt covenants
•“Consolidated Cash Flow” means, for any period, the sum of Consolidated Operating
Income of the Borrower, and its Subsidiaries, plus to the extent deducted in determining such Consolidated Operating Income (i) depreciation and amortization, and (ii)
any aggregate net income during such period arising from the sale, exchange or other distribution of capital assets, provided, however, that the total amount so included
pursuant to this clause (ii) shall not exceed 5% of Consolidated Operating Income for such period, provided further, however, that, in calculating Consolidated Cash Flow
the date of determination of Consolidated Cash Flow, Consolidated Cash Flow shall include Theatre-Level EBITDA for such Off-Balance Sheet Property and shall be
determined with respect to such Off-Balance Sheet Property on the basis of actual Theatre-Level EBITDA within such period and projected Theatre-Level EBITDA for the
remainder of such period (with such projections being based on the average Theatre-Level EBITDA of comparable theater properties of the Borrower which were operated
during the entire 12-month period).
•“Consolidated Operating Income” means,for any period, Consolidated Net Income for such period plus, to the extent deducted in determining the
after deducting portions of income properly attributable to outside minority interests, if any, in Subsidiaries; provided however, that there shall be excluded (a) any income
or deficit of any other Person accrued prior to the date it becomes a Subsidiary or merges into or consolidates with the Borrower or another Subsidiary, (b) the net income
in excess of an amount equal to 5% of Consolidated Net Income for such period before giving effect to this clause (b) (or deficit) of any Person (other than a Subsidiary) in
which the Borrower or any Subsidiary has any ownership interest, except to the extent that any such income has been actually received by the Borrower or such
Subsidiary in the form of cash dividends or similar distributions, and provided that the resulting income is generated by lines of businesses substantially similar to those of
assets after the Effective Date, (g) any items properly classified as extraordinary in accordance with GAAP, (h) proceeds of life insurance policies to the extent such
proceeds exceed premiums paid to maintain such life insurance policies, (i) any portion of the net income of a Subsidiary which is unavailable for the payment of dividends
to the Borrower or a Subsidiary, (j) any gain arising from the acquisition of any debt securities for a cost less than principal and accrued interest, (k) in the case of a
successor to the Borrower by permitted consolidation or merger or transfer of assets pursuant to Section 5.12, any earnings, of such successor or transferee prior to the
consolidation, merger or transfer of assets, (1) any earnings on any Investments of the Borrower or any Subsidiary except to the extent that such earnings are received by
16
Recent Operations
(from MD&A)
Rev. increased 5%
prices
•6.5% increase in
Rev. increased 20.4%
•14.5% increased attendance
•4.2% increase in
concessions/ticket
•8% of increase due to
Country Cinema City Screens
17
Star Wars: The Phantom Menace 431 Mission Impossible II 215
Sixth Sense 293 Perfect Storm 182
Austin Powers: The Spy Who Shagged Me 205 X Men 157
Tarzan 171 Scary Movie 157
American Pie 102 Gone in 60 Seconds 102
TOTAL 1875 TOTAL 1429
1999 2000
revenue –cost relation
EBIT .04 .14
–for a 1% change in revenue, b1is the % change in cost
b1= 1 means margins are constant
b1< 1 means economies of scales/scope
)
rev
rev
log()
cost
cost
log(
1
10
1−−
+=
t
t
t
t
bb
gtis the rev growth rate.